Opinion
12276/07.
Decided on December 20, 2007.
William A Gogel, Esq. Agulnick Gogel, LLC NY NY, Plaintiff.
Keith M. Snow, Esq. Michael A. Cardozo Corp Counsel of the CIty of NY NY NY, Defendant.
Petitioner Michael Yovino moves for an order, pursuant to CPLR article 78, to vacate and set aside respondent New York City Employees' Retirement System's December 14, 2006 determination that petitioner's annual retirement benefit is $35,984.57.
Background
Respondent New York City Employees' Retirement System ("NYCERS") is a public employees' retirement system governed by New York law ( see Retirement and Social Security Law [RSSL] articles 11, 14, 15). New York City employees who join NYCERS become members of a certain "Tier" based upon the date that they join the retirement system. Petitioner Yovino is a retired uniformed sanitation worker of the New York City Department of Sanitation (Sanitation Department). On or about April 1, 1985, Mr. Yovino was appointed to the Sanitation Department and became a Tier IV NYCERS member. RSSL article 15 provides comprehensive retirement benefits for Tier IV members, by which city employees receive a pension after retirement from active service, upon meeting specified age and length-of-service requirements ( see RSSL §§ 600 — 604 [h]).
The Commissioner of the Sanitation Department, after an administrative hearing based upon charges that Mr. Yovino had performed his work in an incompetent manner, found petitioner guilty of misconduct and lack of productivity, and terminated his employment on or about November 9, 2000. Petitioner appealed to the New York City Civil Service Commission, which, after a hearing, by decision dated April 10, 2002, reversed the Commissioner. The Civil Service Commission's decision stated that Mr. Yovino "is to be restored and reimbursed back pay. Vacation service time, benefits, seniority as well as fringe benefits from the date of his termination within sixty (60) days of the date of this determination." The Sanitation Department, pursuant to the Civil
Service Commission's determination, then reinstated Mr. Yovino on or about May 24, 2002. Petitioner was reimbursed back pay and his other benefits were restored.
Subsequently, Mr. Yovino commenced an Article 78 proceeding in Supreme Court, New York County, to compel compliance with the Civil Service Commission's April 10, 2003 decision. The Hon. Diane A. Lebedeff, in an April 4, 2003 decision and order, remanded the matter to the Civil Service Commission for a clarification of its order and determination relating to back pay, overtime and seniority. Petitioner, on May 23, 2005, submitted an application for service retirement and, then on June 2, 2005, he retired from the Sanitation Department, at age 48. At that time, Mr. Yovino had accrued 20.08 years of service (20 years of Qualifying Sanitation Service plus 0.08 years of Additional Sanitation Service). Petitioner, on September 6, 2006, elected to receive the maximum lifetime retirement allowance. Then, on December 14, 2006, NYCERS notified petitioner of its determination that petitioner's annual maximum retirement benefit is $35,984.57, based upon a "final average salary" (FAS) of $73,680.54. Subsequently, petitioner commenced the instant Article 78 proceeding to vacate and/or set aside NYCERS's determination, upon the grounds that it was arbitrary, capricious and an abuse of discretion. Petitioner claims that his annual pension should be $54,309.00.
Discussion
First, Mr. Yovino contends that NYCERS miscalculated his annual retirement,
by failing to base his FAS on his actual 2002, 2003 and 2004 earnings. He claims these earnings to have been $130,889.00 for 2002, $88,719.00 for 2003, and $80,246.00 for 2004. Further, petitioner contends that NYCERS failed to include in its calculation the retroactive monies that he received in 2005 and 2006 for back pay for the three years in question (2002, 2003 and 2004). Also, petitioner contends that NYCERS failed to base his annual retirement benefit on the last 36 months of his employment or the greater of his three best consecutive years' earnings, as required by Tier IV rules. Additionally,
petitioner claims that NYCERS should not have used the five-year averaging FASmethod to calculate his annual retirement benefits, because that method failed to consider that Mr. Yovino's earnings for 2000, 2001 and part of 2002 were incorrectly computed, due to his wrongful termination, which was reversed by the Civil Service Commission. Lastly, petitioner claims that NYCERS improperly assessed various deductions from his annual retirement benefit for account shortages and outstanding loans.
It is axiomatic that in an Article 78 proceeding that the function of the court is to determine whether the action of an administrative agency had a rational basis or was arbitrary and capricious ( see Pell v Board of Educ. of Union School District No. 1 of the Towns of Scarsdale and Mamaroneck, Westchester County, 34 NY2d 222, 230-231). "Arbitrary action is without sound basis in reason and is generally taken without regard to the fact." ( Pell at 231). A rational basis exists where the determination is "[supported] by proof sufficient to satisfy a reasonable [person], of all the facts necessary to be proved in order to authorize the determination"' ( Ador Realty, LLC v Division of Housing and Community Renewal, 25 AD3d 128, 139-140 [2nd Dept 2005], quoting Pell at 231).
A reviewing court will not substitute its judgment for that of the agency unless the agency's determination is arbitrary, capricious, or contrary to law ( see Pell at 231; Matter of Brockport Cent. School Dist. v New York State Local Employees' Retirement System, 270 AD2d 706, 707-708 [3rd Dept 2000]). Further, "[i]t is well settled that the construction given statutes and regulations by the agency responsible for their administration, if not irrational or unreasonable, should be upheld." ( Howard v Wyman, 28 NY2d 434, 438. Additionally, "[t]he interpretation of a statute or regulation by the agency which promulgated it and is responsible for its administration is entitled to great deference, if such interpretation is not unreasonable or irrational." ( L.G.B. Associates v New York State Division of Housing and Community Renewal, 292 AD2d 609 [2nd Dept 2002]). ( See ATM One, LLC v New York State Division of Housing and Community Renewal, 37 AD2d 714 [2nd Dept 2007]; Delillo v New York State Division of Housing and Community Renewal, ___ AD3d ___, 2007 NY Slip Op 09029 [2nd Dept Nov. 13, 2007]).
Pursuant to RSSL § 604-a (c), a retired member in the Tier IV-Uniformed Sanitation 20 Year Retirement Plan ("SA-20 Plan"), such as petitioner, is entitled to one half of his or her FAS for 20 years of qualifying service. For any time exceeding 20 years of qualifying service, a member is entitled to receive an additional 1.5% of his or her "final compensation," which is "the average compensation earned by a member during any five consecutive years which provide the highest average compensation." (RSSL § 604-a [a] [9]). RSSL § 608 (a) defines FAS as:
the average wages earned by such a member during any three consecutive
years which provide the highest average wage; provided, however, if the wages earned during any year included in the period used to determine final average salary exceeds that of the average of the previous two years by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary. [ Emphasis added ]
Tier IV members make monetary contributions to the retirement system through payroll deductions of a prescribed percentage of their annual salary (RSSL § 613 [a]) for a requisite number of years.
NYCERS, in calculating petitioner's FAS, determined that the 36-month period immediately preceding petitioner's date of retirement yielded the highest total wages that the petitioner earned during a consecutive period. A review of the record reveals that NYCERS calculated petitioner's FAS for the periods May 31, 2002 to May 31, 2003, May 31, 2003 to May 31, 2004, and May 31, 2004 to June 1, 2005. With respect to the total wages that petitioner received during 2002, the court finds that NYCERS's decision not to include the $130,889.00 amount in the calculation of petitioner's FAS for 2002 is rationally based. Although the petitioner received a total of $130,889.00 during 2002, NYCERS did not include this total amount in its FAS calculation because Mr. Yovino did not actually earn the entire amountduring 2002. NYCERS, in reaching its conclusion, relied upon the plain language of RSSL § 608 (a), which specifically states that a member's FAS is "the average wages earned by such a member during any three consecutive years which provide the highest average wage [ emphasis added ]."
In Selkin v Regan, 120 AD2d 204, 206 [3rd Dept 1986], the Court held that FAS
"consists of income actually earned during the subject year." Petitioner Selkin claimed that the "lag pay" earned by him more than three years prior to retirement, but paid to him during his final three years, should be included in the calculation of his final average salary. The Court held that his "lag pay" was not earned in the last three years.
More recently, the Court of Appeals ( Weingarten v Board of Trustees of the New York City Teachers' Retirement System, 98 NY2d 575) held that "per session" income earned by teacher members of the New York City Teacher's Retirement System is pensionable and includable in a teacher member's FAS because it is regularly earned.
The Weingarten Court, at 583-584, held:
The Legislature's exclusion of particular forms of compensation or payments from the pension calculus implicates a long-settled principle of statutory construction: where the Legislature lists exceptions in a statute, items not specifically referenced are deemed to have been intentionally excluded ( see Matter of Jewish Home Infirmary of Rochester v Commissioner of NY State Dept of Health, 84 NY2d 252, 262-263 [1984]). Applying this canon of construction in these circumstances, we conclude that by failing to exclude per session compensation when it enacted Retirement and Social Security Law § 431, evidenced an intent to allow per session compensation to be includable for pension purposes. A similar intent can be discerned in the statutes creating Tiers III and IV. They define "final average salary" as "wages" (Retirement and Social Security Law § 512 [a]; § 608 [a]), which in turn means "regular 608 [a] compensation" (Retirement and Social Security Law § 501 [24]; § 601 [l]). Two common meanings of "regular" are "recurring or received at stated, fixed or uniform intervals" and "constituted, selected, conducted, made, or otherwise handled in conformity with established or prescribed usages, rules, or discipline" (Webster's 3d New Intl Dictionary 1913). Under these definitions, the nature and implementation of per session activities (see New York City School Chancellor Reg C-175) can be deemed "regular."
NYCERS, applying the foregoing authority, reasonably concluded that the majority of the lump sum back pay that Mr. Yovino received in 2002 was actually attributable to the wages that he would have regularly earned during the period of his termination from the Sanitation Department, November 9, 2000 to April 10, 2002. NYCERS did not consider the $130,889.00 that the petitioner received during 2002 as wages earned. Consequently, NYCERS did not include this amount in the calculation of petitioner's FAS. The Court finds that NYCERS's interpretation of the relevant statutory provisions and case law is rational and "entitled to great deference . . . [because] such interpretation is not unreasonable or irrational." ( L.G.B. Associates v New York State Division of Housing and Community Renewal, 292 AD2d 609 [2nd Dept 2002]). This aspect of NYCERS' determination was not arbitrary, capricious, or lacking of a rational basis ( see CPLR 7803; Paramount Communications, Inc. v Gibraltar Cas. Co., 90 NY2d 507, 513-514; Matter of Golf v New York State Dept. of Social Servs., 91 NY2d 656, 662, 667; In re Estate of Tomeck, 8 NY3d 724, 731).
NYCERS asserts, that with respect to petitioner's claim that NYCERS should have included his actual earnings of $88,719.00 for 2003 and $80,246.00 for 2004 in its FAS calculation, its FAS determination for 2003 and 2004 is based upon the Tier IV statutory reduction, pursuant to RSSL § 608 (a). It states in relevant part that "if the wages earned during any year included in the period used to determine final average salary exceeds that of the average of the previous two years by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary." NYCERS determined that the 36 months (May 31, 2002 to June 1, 2005) immediately preceding petitioner's retirement date was the period in which Mr. Yovino earned the highest wages for a consecutive 36 month period. Respondent calculated that petitioner's total pensionable amount actually earned was: $74,491.58 for May 31, 2002 to May 31, 2003; $92,283.86 for May 31, 2003 to May 31, 2004; and, $81,132.15 for May 31, 2004 to June 1, 2005. NYCERS, in its opposing papers, sets forth a detailed presentation of its calculation of petitioner's $73,680.54 FAS by using the above-referenced time-periods and the corresponding total pensionable amounts actually earned. Additionally, NYCERS presented a calculation of petitioner's FAS using the time-periods and numerical figures proffered by petitioner. This calculation actually yielded a lower FAS than the one calculated by NYCERS. Thus, the Court finds that NYCERS' calculations for the 36 months (May 31, 2002 to June 1, 2005) immediately preceding petitioner's retirement is rational, based upon a review of the documentation proffered by NYCERS and the statutory restrictions of RSSL § 608 (a).
Next, contrary to petitioner's contention, a review of the record reveals that NYCERS did include in its FAS calculations a portion of the back pay that the petitioner received in 2005 and 2006. As explained above, NYCERS calculated petitioner's FAS for the periods: May 31, 2002 to May 31, 2003; May 31, 2003 to May 31, 2004; and, May 31, 2004 to June 1, 2005. Since NYCERS based its calculation of petitioner's FAS on the May 31, 2002 through May 31, 2005 period, it was reasonable and rational for it to only include in its calculations back pay that was earned by petitioner after May 31, 2002.
Additionally, the court finds ample support in the record for NYCERS's conclusion that, at the time of Mr. Yovino's retirement from the Sanitation Department, he had a $442.11 deficit in his Retirement Reserve Fund (RRF) account and a $545.19 (NYCERS admitted that it originally erred by overstating the deficit by $100.00) deficit in his Membership Contributions Accumulation Fund (MCAF) account. NYCERS presented detailed documentation on how it calculated Mr. Yovino's RRF and MCAF deficits, noting that these deficits were caused by longevity payments from 1990 to 1999 for which pension contributions were not deducted, and the failure to deduct pension contributions in 1989 to 1993 for assignment monies.
Moreover, RSSL § 613-b, "Loans to members of certain retirement systems," states in subsection i. that "whenever a member . . . for whom a loan is outstanding, retires, the retirement allowance payable . . . shall be reduced by a life annuity which is actuarially equivalent to the amount of the outstanding loan. . . ." NYCERS, in accordance with this statutory provision, reduced petitioner's annual pension benefit by $37.15, based upon petitioner's $545.19 MCAF deficit. The Court finds that this aspect of NYCERS determination supported by the record and rationally based in accordance with statutory authority.
Petitioner's argument that NYCERS coerced him into paying his MCAF deficit, and NYCERS transferring these funds to his RRF account, is not supported by the record. NYCERS, in its July 11, 2005 letter to petitioner, merely advised petitioner that, pursuant to RSSL § 604-a (e) (5), a member of the SA-20 retirement plan, would not be able to retire with a deficit in his RRF account. NYCERS further advised Mr. Yovino that any MCAF account deficit would be offset by a reduction in the total benefit amount determined at retirement. Petitioner has failed to present any evidence of coercion by NYCERS.
Lastly, the Court rejects petitioner's assertion that NYCERS improperly assessed
deductions from his annual retirement benefit for the pension loan default which occurred during the time that the petitioner had been terminated from employment. Petitioner's outstanding loan balance was $13,279.01 on September 1, 2006. NYCERS's loan policies, of which the petitioner was advised, clearly sets forth that a member who receives a loan is obligated to repay the amount borrowed regardless of whether the member leaves the City's payroll. Thus, despite petitioner's termination and subsequent reinstatement, he had an ongoing obligation to continue making payments on the outstanding loan amount even during the time that he was not receiving salary paychecks which automatically deducted loan repayments. NYCERS properly calculated, pursuant to RSSL § 613-b (i) that Mr. Yovino's maximum retirement allowance should be reduced by $904.93 per year, based upon his outstanding $13,279.01 loan balance.
Petitioner's remaining arguments, in support of his application to vacate and set aside NYCERS's determination, are without merit. The Court must conclude from its review of the record that NYCERS' determination, that Mr. Yovino's FAS is $73,680.54, and his annual pension benefit is $35,984.57, was calculated in accordance with applicable statutory authority, and has a rational basis. The Court must follow the admonition of Mr. Justice Cardozo, who instructed that "[t]he judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body." ( Mississippi Valley Barge Line Co., v U.S., 292 US 282, 286-287).
Conclusion
Accordingly, it is
ORDERED, that the instant petition of Michael Yovino, pursuant to CPLR Article 78, to vacate and set aside the determination of respondent New York City Employees' Retirement System, dated December 14, 2006, setting petitioner Yovino's annual retirement benefit at $35,984.57, is denied.
This constitutes the Decision and Order of the Court.